ARTICLE FOCUS:

• Agencies solicit candidates
• Guiding principles
• Expected benefits

On October 11, 2011, the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS) jointly announced that they were soliciting nominations from sponsors of innovative device technology for voluntary participation in a pilot program for concurrent review by both agencies.¹ . The pilot project will accept requests for participation for two years, but reserves the discretion for both early termination or an extension, either of which would be announced by public notice.

Based on resource limitations, FDA and CMS expect that only three to five candidates will be accepted for participation each year, based upon applications from sponsors/requesters. Those interested in participating must follow the procedures set forth in the Notice and the instructions at http://www.parallel-review.fda.gov. The Notice recommends that potential applicants contact FDA before initiating the process. Applications are currently being accepted.

Background
FDA is responsible for assuring that drugs and medical devices intended for use in the treatment of humans are safe and effective for their intended uses and that product labeling reflects true and accurate information. CMS makes coverage and payment determinations for Medicare beneficiaries, as well as setting certain broad parameters for product coverage and payment by state Medicaid programs, which are funded in part by the federal government.

Manufacturers face a long process to finally secure federal payment for their products, having to first secure FDA clearance or approval and then navigate through the CMS coverage process, coding and payment determinations, particularly if they are seeking a CMS national coverage determination (NCD). (As described in CMS’s Innovator’s Guide to Navigating Medicare (2010), NCDs are developed by CMS to describe the nationwide conditions for Medicare coverage for a specific item or service and are binding on all CMS contractors and components, up to and including the Medicare Appeals Council.) Some payers follow Medicare's lead for coverage determinations, so the adverse impact of payment delay can be multiplied.

According to the Notice, FDA and CMS had learned that innovators had generally focused on obtaining FDA approval, only to later realize that Medicare payment might not be automatically forthcoming. There is no assurance of a good result (i.e., Medicare payment) from CMS even if FDA has approved a product. As discussed in the Innovator’s Guide, in order to secure Medicare coverage, the product/technology must fall into at least one defined benefit category under the Social Security Act; it must not involve an item or service that is specifically excluded under the Act; and it generally must be “reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member. Preventive services are covered only in very limited circumstances as authorized by statute; “screening” services are generally not covered.

Different types of information may be required by CMS for coverage purposes than that which has already been compiled for FDA. CMS will often approve coverage of an item or service only for certain diagnoses or when the patient’s medical documentation includes specific findings. There may be time limits as to how frequently certain items or services will be covered (only twice a year, for example). In appropriate circumstances, CMS may consider coverage of products for FDA-unapproved or off-label use, potentially requiring significantly different information than that submitted for FDA approval. Under its procedures for Coverage with Evidence Development (CED), CMS may allow coverage but include a requirement for collecting more clinical data. Medicare coverage may also be provided for beneficiaries in approved clinical studies.

Innovators must decide at an early stage in product development what their reimbursement strategy will likely become. This strategy must include such factors as whether the product will be used on an inpatient, outpatient, or other basis, which will influence or determine which Medicare benefit category may be a source for coverage. Early development of a strategy will help to ensure that innovators have compiled the necessary clinical evidence that will be part of the coverage determination. As discussed in the Notice, one advantage of the parallel review process is that early involvement by CMS will focus attention on health outcomes of importance to Medicare and provide early awareness of any remaining evidence gaps.

Although both FDA and CMS are organizationally housed within the federal Department of Health and Human Services (HHS), historically there has been relatively limited interaction between the two entities, even when addressing the same product. Increased collaboration has been a recent goal, as evidenced, for example, by the 2008 CMS regulation that authorized sharing of CMS's Part D (prescription drug) data to support FDA's Sentinel Initiative in its efforts to identify possible postmarket adverse events. In June 2010, FDA and CMS entered into a Memorandum of Understanding (MOU) to promote collaboration and enhance knowledge and efficiency by providing for the sharing of information and expertise between them. The MOU was published in the Federal Register August 11, 2010.